UK accounting regulator’s chairman steps down after eight months

The UK accounting watchdog suffered a big setback on Wednesday when its chairman stepped down just eight months after he was appointed to transform the beleaguered regulator.

Simon Dingemans will leave the Financial Reporting Council at the end of May, returning to a “full-time role in the private sector”. His decision was because of him being prevented from taking on additional roles that may have conflicted with his duties at the FRC, a spokeswoman said.

“It is a disappointment, but it is business as usual and the reform agenda is still in place,” she added.

Mr Dingemans’ sudden departure is believed to have been a surprise to both the watchdog and the profession. Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales, said the exit was a blow for the FRC.

Mr Dingemans, who announced his resignation to the board on Wednesday morning, was making progress in strengthening the FRC’s powers and resources and in restoring its reputation after a string of accounting scandals and corporate collapses led to questions about its effectiveness in policing the UK’s largest audit firms.

“We were pleased when Simon was appointed, and just at a time when the FRC is beginning to make real progress this is clearly a setback,” Mr Izza said. “We would hope the FRC will be able to appoint someone of equal stature in the near future.”

Mr Dingemans was previously finance director of GlaxoSmithKline, where he earned around £5m a year. Before that he spent 25 years at Goldman Sachs, where he ran its European mergers practice and chaired the 100 Group, which represents FTSE finance directors. He was paid £150,000 to work three days a week as chairman of the FRC.

Mr Dingemans was appointed at the same time as the FRC’s chief executive Sir Jon Thompson in October.

The pair were tasked with making a number of difficult decisions about the FRC’s future, following criticism that it was too slow to investigate misconduct, its sanctions were too lenient and its board too close to the industry it supervised.

Mr Dingemans replaced City grandee Sir Win Bischoff as chairman, while former HMRC boss Sir Jon’s appointment ended Stephen Haddrill’s 10-year tenure.

The former management team had been forced to step down following a damning report, by former Treasury mandarin Sir John Kingman, into the regulator’s effectiveness. It recommended that the FRC be replaced by a more powerful regulator called the Audit, Reporting and Governance Authority, expected to be enshrined in legislation in the future.

In February, the FRC announced plans to break up the operations of the Big Four audit firms — PwC, Deloitte, EY and KPMG — the first significant move by its new leadership to overhaul regulation of the sector. The FRC said there should be a ringfencing of audit costs and profits, and the partners in these businesses should no longer be remunerated from a shared pool of earnings with the firms’ consultants or tax advisers. The FRC suspended these break-up plans during the coronavirus crisis.

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